He agrees that the arrest of Huawei’s CFO has alarmed investors, who fear it will “stir up tensions between China and the US.”

Nearly every share on the FTSE 100 is down -- apart from Imperial Brands, British American Tobacco, Diageo, Severn Trent and National Grid.

“All these are considered to be defensive stocks, offering goods and services people would buy regardless of economic conditions. Diageo is perhaps an exception as an alcohol seller yet investors often turn to large, robust business in times of strife. That may also explain why Unilever and Compass declined much less than the broader market.

“The fallers were led by mining stocks which are always sensitive to any fears over the global economy and China.

Jeez it has been an intense week for US-China relations. The post-G20 trade truce is starting to feel like a distant memory, with Tariff Man Donald Trump, and now the arrest of Huawei’s Meng Wanzhou, serving to undermine whatever (naïve) hopes of progress had built up on Monday.

Wanzhou, global chief financial officer of telecoms equipment at the Shenzen-based smartphone firm and daughter of its founder, was detained in Canada last Saturday and is now facing extradition to the USA, relating to an investigation into whether or not she violated sanctions against Iran.

FTSE 100 hits two-year low

Ouch! Britain’s FTSE 100 has fallen by over 80 points at the start of trading, a drop of 1.2%.

That takes the blue-chip index of top shares in the City down to 6840 points, its lowest level in two years.

The FTSE 100 since December 2016 Photograph: Thomson Reuters

The arrest of Huawei’s Meng Wanzhou has spooked traders, who are already unsettled by Brexit uncertainty, and the prospect that the global economy is slowing.

Mike van Dulken of Accendo Markets writes:

The latest bout of anxiety stems from the arrest and planned extradition from Canada to the US of the CFO (and founder’s Daughter) of Chinese telecom giant Huawei, on allegations of breaching Iran sanctions and suspicions of cyber-espionage.

Having swung between optimism and scepticism about a US-China trade war truce through February, and we note Chinese diplomats making positive noise overnight (“friendly and candid atmosphere” between Xi and Trump), traders are understandably cautious.

Today’s losses also take the FTSE 100 below its level at the end of the last millennium! (when the FTSE 100 closed at 6,930 points).

Huawei is insisting on Meng Wanzhou’s release, insisting they aren’t away of any misconduct:

People's Daily,China (@PDChina)

#Huawei says it’s not aware of any misconduct by its CFO Ms. Meng and very little info about the specific allegations has been provided, adding that it complies with all applicable laws in countries where it operates and export controls & sanctions applicable to UN, US & EU. pic.twitter.com/KCNGrjEqmd

Meng Wanzhou’s arrest will probably exacerbatetensions between the US and China, my colleague Lily Kuo reports:

US authorities have been investigating Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws, sources told Reuters in April.

Huawei, one of the world’s largest makers of telecommunications network equipment, said in a statement that Meng had been “temporarily detained” and faced unspecified allegations” in the Eastern district of New York.

The company said it had complied with “all applicable laws and regulations where it operates,” including sanction laws.

“There has been very little information provided to Huawei on the specific allegations. Huawei is not aware of any misconduct by Ms. Meng,” Guo Ping, rotating CEO of the company said in a statement posted on his Wechat account on Thursday.

“The company believes the Canadian and US legal systems will ultimately reach a just conclusion,” he said.